Real Wage Growth Falls To -1.9% As Inflation Rises To 6.8% In November (Taylor Rule Rate Rises To 16.94% While Fed Remains At 0.25%)

Confounded Interest ^ | 12/10/2021 | Anthony B. Sanders

[Browns Ultra Fan]

Inflation keeps rising and consumers keep getting hurt. No wonder President Biden’s team sent out a media splash asking them to hype the economic recovery.

Real wage growth fell to -1.9% YoY in the latest Consumer Price release. As The Fed keeps its massive foot on the monetary gas pedal.

The overall Consumer Price Index (CPI) rose 6.8% YoY.

The biggest gains in Consumer Prices were for energy with gasoline rising 58.1% YoY. But almost nothing was spared the rod of government policies.

The Taylor Rule, what The Fed Funds Target rate SHOULD be, rose to 16.94%. Versus the current rate of 0.25%. Its as if The Fed Open Market Committee is watching Tik-Tok instead of the economic numbers.

[Browns Ultra Fan]

They are blaming Trump for inflation, but it didn't start until COVID and Stimulypto from DC and The Fed.

[MeneMeneTekelUpharsin]

6.8%!!! What a joke. Inflation is far higher than that.

[Flick Lives]

The Taylor Rule, what The Fed Funds Target rate SHOULD be, rose to 16.94%. Versus the current rate of 0.25%.

—

The Fed doesn’t have the will to raise Fed fund rates to 1.6% much less 16%. The markets and government are addicted to “free” money. Like any addict, they have a hard time even getting to the point of admitting they have a problem (”inflation is transitory”).

[bert]

G the rule of 72, at 7%, the debt is halved in 10 years

[SaxxonWoods]

Meanwhile, what’s really happening (CNCBC):

The Federal Reserve every quarter produces what’s called the financial accounts of the U.S., and on Thursday, the central bank released the latest edition, which is 205 pages of dense statistics on the assets and liabilities of households, businesses and governments.

James Knightley, chief international economist at ING, put a positive spin on the latest report. From the low point of the first quarter of 2020, household wealth has surged by $35.5 trillion. Combine this wealth rise with employment growth, and wage gains, and the U.S. consumer looks to be in good shape. The “further massive accumulation of wealth only adds to the potential spending ammunition of the household sector, which gives us more confidence that the U.S. economy can expand by more than 4% in 2022,” says Knightley.

Scott Grannis, author of the Calafia Beach Pundit blog and former chief economist for Western Asset Management, had a different interpretation. He pointed out that while liabilities of households have grown 21% from their 2008 peak, net worth has more than tripled. After adjusting for inflation, household net worth has increased 11 fold over the past 70 years.

Another way to look at it — adjusting for inflation and population growth, net worth per capita has soared from $72,000 to $432,000 over the last 70 years.

Both charts, he noted, are running ahead of their long-term trend line. “This could be a replay of what we saw in 2000 and 2007, when some markets got very overextended. By that I mean that for the next several years a mere reversion to trend would mean very modest returns for investors,” he said.

Those low returns could materialize from inflation. “It would not be surprising to see net worth fall below its long-term trend, as it did during the high-inflation 1970s,” he said. With inflation running at 7%, the average interest rate on federal debt at about 2%, the real value of federal debt is falling by about 5% a year.

“In other words, inflation is subtracting over $1 trillion of the real value of federal debt outstanding every year at the same time inflation is boosting government revenues and nominal GDP. This means that the private sector is effectively paying an additional $1 trillion per year in taxes to the federal government (aka the inflation tax),” he said.

[Alberta's Child]

Those numbers clearly illustrate how the entire Federal manipulation of our economy is a racket built on fraud.

The 10-year U.S. Treasury bill will get you less than a 1.5% rate of return … at a time when inflation is being REPORTED at about 7% and in reality is almost certainly north of 10%.

You are watching the slow-motion collapse of an empire here.

[kabar]

Assuming the debt stays the same. When Bush left office in 2009, the national debt was $10 trillion. Today, it is $30 trillion.

[Alberta's Child]

The “further massive accumulation of wealth only adds to the potential spending ammunition of the household sector, which gives us more confidence that the U.S. economy can expand by more than 4% in 2022,” says Knightley.

There are only two factors that drive GDP growth: (1) population growth, and (2) productivity growth.

The population growth rate in the U.S. has been anemic — and falling — for years. Productivity is actually in DECLINE for the average U.S. adult.

Where is this 4% growth going to come from?

[Varsity Flight]

D-Employment. Employment that is unable to offset the costs of living.

Housing. Transportation. Food. Energy. Utilities. BodyMORTGAGEsCare. Taxation. Property Taxation. InsuranceBankingCare.

Millstone-shackle. ❎❎❎

[Vermont Lt]

I hadn’t thought of the Taylor rule for years.

That is some scary stuff...

[riri]

LOL-right? I saw turkeys $1.57 on sale. They are usually 99 cents on sale.

My insurance rates just all sky rocketed.

Gas? Yah, we won't go there.

[Vermont Lt]

If anyone is interested in how the Taylor Rule is calculated, this is a good primer:

https://www.investopedia.com/terms/t/taylorsrule.asp

[kabar]

SS and federal pensions receive a 5.9% COLA increase in January. In 2021 the USG spent 1.2 trillion on benefits.

[libertylover]

Real wage growth fell to -1.9%

Wait, wait, wait. They said $15/hour would lead to prosperity even for unskilled workers.

[Diana in Wisconsin]

Let’s Go, Brandon!

Shadow Stats has inflation pegged at about 10.3% as of today, compared to 1990 dollars:

http://www.shadowstats.com/alternate_data/inflation-charts